Timothy Geithner, the American treasury secretary, achieved a significant diplomatic success when he persuaded the Japanese government to reduce its dependence on Iran. Last year, Japan imported 327,000 barrels per day from the Islamic Republic, accounting for 13 per cent of Iran's total oil exports.

The European Union is expected to agree its own embargo on Iranian oil when foreign ministers meet on 23 Jan. Its 27 member states account for a further 24 per cent of Iranian crude exports, with Greece, Italy and Spain buying a total of 450,000 barrels per day.

If these embargos come fully into effect, Iran would face the loss of 37 per cent of its total oil exports of 2.5 million barrels per day. Japan's decision was not an easy one: the country has depended more heavily on imported crude since the closure of its nuclear plants after the disaster at Fukushima. Last year, Iran provided 7 per cent of Japan's oil, according to the International Energy Agency.

There is also a significant risk that severing Iranian supply may cause global oil prices to rise. But Jun Azumi, the Japanese finance minister, said that Iran's nuclear ambitions were a "problem that the world cannot ignore", adding: "In this respect, we fully understand the actions taken by the United States."

America and its allies have mounted a renewed diplomatic effort to isolate Iran since the International Atomic Energy Agency reported last November that Tehran had studied the question of how to build nuclear weapons.

However, any embargos are only likely to come into effect gradually. Refiners generally buy two thirds of their crude on long term contracts, and these will probably be honoured. The proposed EU embargo - which all member states are understood to endorse in principle - is likely to be phased in over a period of up to 12 months.

However, European refiners have already begun cutting orders for Iranian crude on the short term spot market, forcing Tehran to keep more barrels sitting on idle tankers, waiting for a buyer.

Even after any restrictions come fully into effect, Iran will probably find customers. China is the biggest buyer of Iranian crude, importing 550,000 barrels per day, while India ranks third in the league, taking 310,000 barrels.

Iran will probably try to redirect its exports towards these trading partners. But China and India will be able to drive a hard bargain and insist on low prices. "Financially, it makes complete sense for China to ultimately take as much Iranian oil as it can at a discount in order to fill up its strategic petroleum reserves," said Nigel Kushner, chief executive of Whale Rock Legal, which advises on sanctions and export controls.

"My assessment is that we will see a short term reduction in Chinese deals with Iran, but ultimately China will re-enter the market with gusto and take as much Iranian oil as it can, while it can, at rock bottom prices."

The effect will be to deprive Iran of billions of dollars of oil revenues, striking at the central pillar of the country's finances. Previous Iranian national budgets have assumed an oil price of $80 per barrel. If the country is forced to sell its principal export for less than this price, it will deepen its financial woes, although the effect will be complicated by the hedging arrangements that surround future oil contracts.

Worries about the consequences of an oil embargo help explain a recent run on the Iranian national currency, the Rial, which has lost about 40 per cent of its value against the Dollar in the last month.

"If Iran cannot shift sufficient oil at its budgeted costs, then the Iranian economy will go downhill very quickly," added Mr Kushner. "Iran has hitherto been resilient in the face of sanctions, but that may well change and hit people on the street harder."